Impala Platinum (Implats) is aggressively upping the ante to gain control of Royal Bafokeng Platinum (RBPlats) — and it could emerge the victor in this war with rival Northam, say analysts.
This week, Implats increased its shares in RBPlats to 31.94%, after buying shares on the open market. The company intends to gain control of RBPlats, which has a market capitalisation of R44bn.
Implats, which bought 24.5% in RBPlats from institutional investors towards the end of November, initially made an offer to RBPlats shareholders in October, but that was rejected by the company’s shareholder Royal Bafokeng Holdings.
Implats has since made another offer to shareholders at R150 a share.
In response to Implats's October offer being rejected, Northam acquired 32.8% of RBPlats for R180 a share.
Seleho Tsatsi, investment analyst at Anchor Capital, said both Implats and Northam would like to own RBPlats outright.
The move by Northam has spurred Implats to also act faster, which it has done over the past week with the approach to institutional shareholders and the general offer, Tsatsi said.
“Northam's offer was at a hefty premium to where the undisturbed RBPlats price was before this all started. In part, that likely reflected the urgency they felt in securing what they hoped would be a blocking stake.”
Tsatsi said “at this stage, Implats appears more likely to gain control given that Northam can't increase its stake without triggering a mandatory offer, until May 2022". Until then Northam will not be able to make an offer lower than the R180 a share it paid.
Peter Major, director of mining at Mergence Investment Managers, said if Implats manages to get control of RBPlats, this will add another 10-15 years of full production at Implats.
Major agreed that Implats is likely to gain control of RBPlats.
According to Tsatsi, there are more obvious synergies between Implats and RBPlats than between Northam and RBPlats.
Asked how the deal would benefit the community, Implats said it has a good relationship with the Royal Bafokeng Nation (RBN), with whom “we have several joint community projects”.
The RBN is represented on the boards of both Implats and Impala, the operating subsidiary.
Implats recently renewed its land-lease agreement with the RBN for 35 years, and the RBN and local community continue to receive rental income. RBN communities are prioritised for procurement and other enterprise development initiatives as well as for jobs. The communities benefit from Implats’s social and labour plans and corporate social investment, among other initiatives. The RBN would continue to have board representation in RBPlats, Implats said.
The company said that “importantly, the joint entity will be much stronger and less vulnerable to economic downturns — providing social and economic benefits extended and leveraged to their full potential”.
In a statement issued last week when the offer to RBPlats shareholders was announced, Implats said the deal would offer shareholders exposure to a global platinum, palladium and rhodium (PGM) portfolio, comprising operating assets, projects, and a toll-refining business, which is “well-positioned to capture the benefits of the full PGM value chain through integrated processing facilities, including wholly owned smelters, as well as base and precious metal refineries”.
For Implats, the deal is part of its strategy to increase exposure to low-cost, shallow, mechanised assets, further positioning the group to ensure a portfolio of high-value, sustainable and competitive operations.
Northam said in a statement when it bought its stake in RBPlats that the deal would give the company exposure to RBPlats's “proven mining operations and well-understood shallow ore bodies, of which a significant portion is mechanised. The transaction will also introduce further diversification to Northam’s metal mix interests, given RBPlats's higher relative platinum contribution.”
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